Oil Prices Turn Higher Despite Chinese Lockdown And Russian Price Cap Discussions
Friday was a relatively low-volume trading day, but it seems that oil prices still edged higher. All of this comes under the backdrop of new lockdown measures in China and potential talks about capping the price of Russian crude oil.
Overall, Brent crude was trading at $86.68 (1.7% higher), while the WTI Crude oil was trading at $79.76 after gaining 2.3%. In short, crude oil has been gaining recently instead of turning bearish, which tells us that the sentiment is still positive.
Oil Prices Could Go Down After Price Cap On Russian Oil
However, experts believe that the benchmarks which measure the price of crude oil will turn lower if the price cap on Russian oil becomes a reality.
G7 countries are supposedly in talks with the EU to cap the trading price of Russian oil between $65-$70. If this happens, it will add to a growing list of sanctions put on Russia.
After this news, the price of Russian Urals turned lower and was trading near $67 per barrel. So it seems that even just the news of the price cap is already during the Russian oil prices lower.
Overall, experts believe that measures like this will affect Russia's oil output and will also hurt its oil revenues.
If we look elsewhere, China is in no mood to cool down the COVID-19 lockdown... Considering how the country is among the top oil importers in the world, it is also expected to have an impact on crude oil prices.
In fact, the lockdown measures could be introduced in more cities in an attempt to curb COVID-19 cases. This will result in a dampening of economic activity, which will lower the oil demand.
So despite the short-term bullish trend in oil prices, there are considerable risks ahead for the crude oil commodity. This means it is more of a question of how much positivity can be shown by the oil traders!